On February 28, the CFPB issued Bulletin 2022-4 regarding repossession of vehicles, and the potential for violations of the Dodd-Frank Act’s prohibition on engaging in unfair, deceptive, or abusive acts or practices (UDAAPs) when repossessing vehicles.  The CFPB has promised to use all appropriate tools to hold auto lenders and servicers accountable if they engage in UDAAPs in connection with their activities.  Based on recent examinations and enforcement actions, the CFPB has observed the following activity in the auto finance industry:  illegally seizing cars, sloppy record keeping, unreliable balance inquiries, and ransom for personal property.

To prevent UDAAPs, the CFPB notes that entities should, among other things, consider doing the following:

  1. Review policies and procedures, including call scripts, to ensure that they provide employees with accurate information about steps consumers can take to prevent repossession;
  2. Monitor repossession service providers for compliance with repossession cancellations;
  3. Review consumer contracts to validate that any fees charged to consumers are authorized under the terms of applicable contracts; and
  4. Perform regular reviews of service providers, including repossession vendors, as to their pertinent practices.

Putting in Into Practice:  This bulletin represents the latest in a series of public warnings from the CFPB that it is closely monitoring auto industry conduct, especially as it relates to ensuring affordable credit, servicing and collections, and fair competition (we recently discussed the CFPB’s latest look at auto finance companies in a previous Consumer Finance and FinTech blog post here).  Auto finance companies should be mindful of these warnings and consider taking action to implement some of the best practices in this bulletin before becoming the subject of a supervisory examination or an enforcement action.